Capital Served to Buffer CU Against Uncertain Future

FLINT, Mich. - Marty Smith, CEO of the $317 million Dort FCU said his CU had chosen to accumulate the additional capital to serve as a hedge against what may be an uncertain automotive future. "We have had a history of generating strong returns," Smith said, speaking of the 55 year-old CU which had its origins serving the employees of the AC Sparkplug company, which later became the Delphi parts manufacturer. "But we also could see where our earnings might take a hit as Delphi and the auto industry began to experience some uncertainty, so we tried to plan for that beginning in the mid-1980s." As of March 2006, Dort had capital of 22.54%, according to NCUA, and posted an ROA of .93% significantly higher than the .74% average posted by its peers. The CU had also acted to try to broaden its base as well, Smith explained, expanding its SEGs to over 450 and then, recently, applying for and receiving a community charter to serve the residents of a three-county area around Flint. The expansion necessary to serve this new pool of potential members, Smith explained, would take up a bit of the additional capital the CU had set aside for possible new branches, ATMs and marketing efforts. But he added that the CU had concluded that some of its 46,000 members might need a bit of the money now so the CU's board had recently voted to distribute a $1 million bonus dividend before the end of this year.